Big Money in Small Fashions

By TODD ZAUN

Published: April 23, 2004

TOKYO, April 22—
Just over a decade ago, Yuzo Narumiya, in his mid-50's and looking for a way to revive his family's kimono wholesaling business, had what sounded to many like a really bad idea.

Just as Japan's economy was turning down and consumers were cutting back, Mr. Narumiya was drawing up plans to market a line of expensive clothing to a rapidly shrinking segment of the population with no disposable income, a group of customers who often cannot see over the counters and need help reaching the upper racks.

That unlikely business plan has put Mr. Narumiya, now 67, at the center of one of the most vibrant areas of Japan's retail sector with a chain of shops selling $80 blouses and $120 skirts to fashion-conscious 9- to 14-year-old girls.

The company now has 850 shops in Japan, up from 586 two years ago. Narumiya International recently opened its first store overseas, in Seoul, South Korea, and the privately held company is preparing to offer shares to the public later this year.

Still, it is no wonder that the idea of marketing high-end fashions to girls was at first greeted with skepticism. Because of the country's declining birth rate, the population of children 14 and younger is expected to fall to 17 million in 2010 from 27 million in the early 1980's.

But to Mr. Narumiya, who worked for the upscale Japanese department store Takashimaya before taking over his father's kimono business, fewer children meant that parents would be more likely to spoil the ones they had. Besides, the graying population was increasing the ranks of doting grandparents. ''Many older people don't spend a lot on themselves,'' Mr. Narumiya said, ''but there's almost no limit to how much they'll spend on their grandchildren.''

Shinobu Ono and her 10-year-old daughter, Erena, are exactly the kind of customers Mr. Narumiya has had in his sights. In the Mezzo Piano shop in Tokyo's Shibuya district one recent Saturday morning, Ms. Ono, a 31-year-old homemaker, dressed in black, looked over an outfit her daughter had picked out: a frilly denim skirt for 9,800 yen ($89.60) and a 7,900-yen white T-shirt decorated with pink bows and stitching. ''They're expensive, but they're so cute,'' she said. ''I wish there were brands like this when I was a child.''

Ms. Ono, who was already holding a bag full of the children's cosmetics that Narumiya International recently introduced, said she spends about 50,000 yen a month, or about $457, on clothes for Erena, her only child.

The company's first brand for young girls, called Angel Blue, was introduced in 1991 as a line of clothes cut in styles popular with older teens but decorated with cartoon characters and bold colors to appeal to younger tastes.

Initially, Mr. Narumiya said, department stores refused to carry the clothes, with buyers arguing that they were too expensive and did not look like something for children. But the company got a break when the members of Speed, then a top all-girl pop group, began appearing on television wearing Angel Blue designs. As the group's young fans began asking for the brand, more and more department stores offered to carry it, and Mr. Narumiya learned a lesson in the value of good publicity.

Since then the company has focused on refining its marketing effort. Narumiya International provides wardrobes for several young pop groups and has spent heavily on magazine advertising, helping to drive a proliferation in preteen fashion magazines. Although sales for most categories of Japanese magazines are declining, sales of magazines for 9- to 14-year-old girls, with titles like Pichi Lemon, Nicola and Love Berry, rose 50 percent last year, according to the All Japan Magazine and Book Publishers' and Editors' Association.

Narumiya International holds fashion shows several times a year, offering tickets only to those customers who purchase 20,000-yen worth of the company's clothes on the day of the show.

Utata Iwata, an analyst at the Yano Intelligence Corporation, a market research company, said Narumiya International's sales had grown rapidly because it was the first company in Japan to recognize that there was significant demand for high-end children's clothes.

''Before Narumiya, no company was supplying this market,'' he said.

While the overall children's clothing market in Japan has been shrinking, Yano estimates that the market for clothes for 10- to 15-year-olds, roughly the same as Narumiya International's target market, will grow to 401 billion yen in 2005 from 390 billion yen last year, in large part because of strong sales of the more expensive brands.

Naturally, Narumiya International's success means that competitors have been moving in. The Tokyo-based Onward Kashiyama Company introduced a line of expensive children's clothes last year, and the preteen fashion magazine Nicola is introducing its own brand.

To keep growing, Narumiya International is looking to expand overseas, with plans to open stores in other Asian countries beginning next year.

Mr. Iwata, the retail market analyst, said that he thought the company's plans to expand to Asia were well timed -- that increasingly, South Korea and other Asian countries are looking to Tokyo, rather than Europe or America, for the latest trends in fashion and popular culture.

''They certainly can succeed in Asia, and I think there's a good chance that they will,'' Mr. Iwata said.

Narumiya International does not have any concrete plans to expand in Europe or the United States, where companies are already selling high fashion for babies and toddlers, like the LVMH Mo

Photos: Shinobu Ono with her daughter Erena in Narumiya International's Mezzo Piano store in the Shibuya district in Tokyo. The company has done well selling high-priced clothing to 9- to 14-year-old girls.; Yuzo Narumiya, president of Narumiya International. (Photographs by Elena Aframova for The New York Times)(pg. W1); A young customer has her fingernails polished in Narumiya International's trendy Mezzo Piano shop in the Shibuya district in Tokyo. (Photo by Elena Aframova for The New York Times)(pg. W7)